WOULD THE GOVERNMENT INCENTIVES ON FERTILITY WORK?

Abstract

The advent of modern methods of contraception has rendered fertility a choice variable and its analysis possible under the Hicksian choice theoretical framework. Thus the basic building blocks (such as income, prices and tastes) have been emphasised in the recent socio-economic theories on fertility. However the basic controversy regarding the exact nature of the relationship has stimulated several theoretical and empirical researches. The present study looks at just two of the many theories that were written, namely: The Chicago-Columbia Theory propounded by Becker and The Pennsylvania Theory pioneered by Easterlin, Pollak and Watcher. It is the incorporation of endogenous tastes into the latter that distinguished it from the former. Besides, the study investigates the relative significance of several determinants of fertility. The investigation takes two prongs : A time series analysis using an econometric model and a cross-sectional tabular analysis. The income effect on fertility is found to be positive. The wife's earnings, characterising the opportunity cost of the mother's time in bearing and rearing children, shows a negative effect. But both estimates are statistically insignificant. Only the estimate representing the material aspirations of individuals is significant. Consequently, we are supplementing our study with cross-sectional analysis. The results that we obtained from the analysis helped us to predict the effectiveness of the new population policies introduced and to suggest recommendations and improvements to the existing policy measures.